ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Sunday, February 18, 2018

Conference announcement

Conference Announcement

Law Teaching for Adjunct Faculty and New Professors is a one-day conference for new and experienced adjunct faculty, new full-time professors, and others who are interested in developing and supporting those colleagues. The conference will take place on Saturday, April 28, 2018, at Texas A&M University School of Law, Fort Worth, Texas, and is co-sponsored by the Institute for Law Teaching and Learning and Texas A&M University School of Law.

Sessions will include:

  •   Course Design and Learning Outcomes – Michael Hunter Schwartz

  •   Assessment – Sandra Simpson

  •   Active Learning – Sophie Sparrow

  •   Team-based Learning – Lindsey Gustafson

  •   Technology and Teaching – Anastasia Boles

    Additionally, master teacher Gerry Hess, Professor Emeritus, Gonzaga University School of Law, will be on hand for one-on-one mentoring sessions throughout the day for a limited number of participants. Indicate your interest on the registration form, slots will be filled on a first-come-first-served basis, and we will notify you prior to the conference if you have been assigned a meeting time.

    By the end of the conference, all participants will have concrete ideas to bring back to their students, colleagues, and institutions. And each participant will receive a copy of Teaching Law by Design for Adjuncts or Teaching Law by Design.

Click here for the registration link

Click here for the hotel link

Sheraton Fort Worth Downtown Hotel 1701 Commerce Street
Fort Worth, TX 76102
(817) 335-7000

For more information, contact ILTL Co-Directors:
Sandra Simpson Emily Grant simpsons@gonzaga.edu emily.grant@washburn.edu

Kelly Terry

ksterry@ualr.edu

February 18, 2018 | Permalink

Saturday, February 17, 2018

The Met Can Keep Picasso Sold During Nazi Flight

A U.S. judge on Wednesday dismissed a lawsuit seeking the return by the Metropolitan Museum of Art in Manhattan of a Pablo Picasso masterpiece that a German Jewish businessman was allegedly forced to sell at a low price in order to fund an escape from the Nazis and fascism.

Paul and Alice Leffmann fled Germany for Italy in 1937. Paul Leffmann sold “The Actor” the next year to two art dealers for $12,000 to fund an escape to Switzerland from the Fascist regime of Benito Mussolini, a Hitler ally.

The Met acquired “The Actor” in a 1952 donation, but did not acknowledge Leffmann’s ownership until 2011, after decades of incorrect cataloguing. Leffman’s great-grand niece, who handles the estate of the Leffmans, claimed that the circumstances of the 1938 sale meant that her family never lost title. The Met disagreed, while expressing sympathy for the Leffmanns’ plight.

The judge found that the sale “occurred between private individuals, not at the command of the Fascist or Nazi governments,” and not because of a “wrongful threat” by the buyers that took away Leffmann’s free will. Images

“Although the Leffmanns felt economic pressure during the undeniably horrific circumstances of the Nazi and Fascist regimes,” the judge wrote, “that pressure, when not caused by the counterparties to the transaction (or the defendant) where the duress is alleged, is insufficient to prove duress with respect to the transaction.”

It is both sad and interesting that so many years after the fascist rise to and fall from power, these types of cases are still heard in courts in this country and beyond.

February 17, 2018 in Famous Cases, In the News, Recent Cases, True Contracts | Permalink

Wednesday, February 14, 2018

Monetizing Sexual Harassment Contractually

Monetizing Sexual Harassment Contractually

In the Harvey Weinstein scandals, investigations have resulted in further almost incredible instances of alleged misconduct including:

  • Verbal threats, such as telling employees "I will kill you" or "I will kill your family"
  • Employing female staff as "wing women" to "accompany [Mr Weinstein] to events and facilitate [his] sexual conquests"
  • Demanding sexual favors in return for career promotion at the studio
  • Requiring his drivers to "keep condoms and erectile dysfunction injections in the car at all times"
  • The requirement for his assistants to schedule "personals for sexual activity" both during office hours and after work
  • Belittling female members of staff with insults about their periods, and shouting at one member of staff that she should leave the company and make babies as that was all she was good for.

Apparently, contracts for Mr. Weinstein contained the proviso that mistreatment claims would result in financial penalties imposed upon the accusers rather than be outright prohibited contractually. This, says some sources, “effectively monetized” sexual harassment.

Surely, no court of law would uphold a contractual clause penalizing an employee merely for making accusations of criminal conduct so long as this was done in good faith (which, as we now know, the accusations against Mr. Weinstein were). It is your legal right and arguably moral duty to call out criminal conduct when it happens. However, whether such an argument would ever be heard in court is questionable, for most employees working for famous, influential companies such as that of Mr. Weinstein and Mr. Weinstein himself are probably loath to stand up contractually against Mr. Weinstein. He clearly knew that. Many women didn’t even dare speak out against him for his criminal conduct or if they did, were not believed or helped. But these contractual clauses still show the gall, sickness, and immorality of Mr. Weinstein.

On a happier note: Happy Valentine’s Day! (I swear that the timing of this post is mere coincidence.)

February 14, 2018 in Celebrity Contracts, Commentary, Current Affairs, Famous Cases, In the News, True Contracts | Permalink | Comments (1)

Tuesday, February 13, 2018

Attorneys general request legislation to protect sexual harassment claims from arbitration clauses

By my count, 56 attorneys general have sent a letter to Congress asking for legislation that would exempt sexual harassment claims from the ubiquitous arbitration clauses found in employment contracts. The letter is succinct and eloquent on the damaging effects arbitration has on these victims and society as a whole. 

February 13, 2018 in Commentary, Current Affairs, In the News, True Contracts | Permalink | Comments (0)

Friday, February 9, 2018

Beyonce faces a breach of contract suit over Formation

I teach many Beyonce cases in entertainment law, but usually in an intellectual property context. The New Orleans Advocate reports that Beyonce has been sued in connection with her single Formation, but the lawsuit is contractual in nature. The plaintiff, Kimberly Roberts, is alleging that she entered into a contract with Beyonce to use footage from her documentary in exchange for a lump-sum payment and royalties. Roberts is alleging that Beyonce has breached the contract by failing to pay royalties. Roberts also alleges that Beyonce has exceeded the scope of the license that Roberts granted. 

February 9, 2018 in Celebrity Contracts, Current Affairs, Film, In the News, Music, True Contracts | Permalink | Comments (0)

“Whenever That Might be” is Illusory Promise

Toll Processing, LLC, plans to have Kastalon, Inc., fix some very large industrial machinery for it at some point in time. Kastalon stores the machinery in the meantime, thinking that it will only be a few months until Toll Processing can issue a purchase order for the repair. However, Toll Processing never does so. Kastalon eventually sells the machinery for its scrap value; $6,380. About two years later, Toll Processing contacts Kastalon to have the machinery fixed. “What machinery?,” asks Kastalon. “My $417,000 machinery,” is the answer.   Lawsuit is filed for breach of contract.

Is storing items for a party without any definite timeframe being agreed upon an illusory promise? Both the district court and the Seventh Circuit Court of Appeals found that Toll Processing’s argument that Kastalon had promised to store the machinery until the issuance of a purchase order, “whenever that might be,” was indeed an illusory promise rendering the contract unenforceable. Perhaps, said the courts, the parties attempted to formulate a contract and were comfortable with somewhat informal proceedings, but parties cannot expect courts to complete the negotiation process and arrive at material terms on their behalf.

That makes sense, but the opinion also states that no less than two years had gone by between any contacts between the two companies. You would think that a simple email asking, “hey, what do you want us to do with your equipment, we can’t store it for free anymore?,” would have been possible and might have resolved this matter. The opinion does not mention bad faith, which seems to be at issue as well.

The case is Toll Processing Services, LLC, v. Kastalon, Inc., 2018 WL 505338.

February 9, 2018 in True Contracts | Permalink | Comments (0)

Thursday, February 8, 2018

Yale Fellowship in Private Law

The Yale Law School Center for Private Law is now accepting applications for the 2018-19 Fellow in Private Law. The Fellowship in Private Law is a full-time, one-year residential appointment, with the possibility of reappointment. The Fellowship is designed for graduates of law or related Ph.D. programs who are interested in pursuing an academic career and whose research is related to any of the Center for Private Law's research areas, which include contracts (including commercial law, corporate finance, bankruptcy, and dispute resolution), property (including intellectual property), and torts. More information is available here.

February 8, 2018 | Permalink

Contract law and doll designs

I am late to the party on this, but I still thought I would point you to Jill Lepore's recent review in the New Yorker of (among other books) Orly Lobel's You Don't Own Me: How Mattel v. MGA Entertainment Exposed Barbie's Dark Side. The book is about the epic showdown between Mattel, makers of Barbie, and MGA, maker of rival dolls Bratz, and it has a contract law angle: The designer who created Bratz worked for Mattel and allegedly arrived at the design for Bratz while under an employment contract with Mattel that would have entitled Mattel to the copyright for the design. 

The review relays testimony from Mattel's CEO regarding his understanding of the scope of such clauses in employment contracts, namely that they are broad enough to entitle Mattel to claim ownership of designs created decades before the employee in question was hired. Unsurprisingly, in my experience, corporations frequently believe that clauses in employment contracts are indeed very broad; it's unclear how much the assertions of such broad readings affect employees' understandings of their rights. 

February 8, 2018 in Celebrity Contracts, Commentary, Famous Cases, True Contracts | Permalink | Comments (0)

Wednesday, January 31, 2018

We *think* there's an NDA. Or is there?

Someday I will blog about things other than NDAs again but I feel like every time I open the internet there's another story about an NDA. Everyone today was talking about last night's interview of Stormy Daniels on Jimmy Kimmel Live!, which was a bizarre series of answering-questions-with-questions and playing coy and talking around the main issue, which was her alleged affair with Donald Trump in 2006. You can find lots of articles online; here's one that lays it out. Those trying to summarize the interview generally seem to assume that Daniels must be restricted by an NDA, because she could say if there wasn't an NDA, but it's the proving of a negative, basically; the reporters are trying to make sense of the blank space the non-answers leave in their wake. 

It's all had me wondering about the role NDAs played--or maybe more importantly, didn't seem to play?--during the Clinton impeachment. Lots of details about Clinton's sexual harassment history came out during the impeachment, and from my brief research into it, it doesn't seem like there were any NDAs in play. Does anybody have other information about this? How do the number of NDAs around Trump in play today shift our perspective, conversation, and legal analysis? 

January 31, 2018 in Commentary, Current Affairs, Government Contracting, In the News, Television, True Contracts | Permalink | Comments (0)

Monday, January 29, 2018

Society continues to rely on women breaking NDAs to report abuse

I’ve written many, many times now on the ways in which NDAs have been used to protect and enable systemic abuse of less empowered people, and they’re in the news again. USA Gymnastics has decided not to fine McKayla Maroney for violating her NDA and speaking out about the abuse she suffered at the hands of Larry Nassar, the Team USA doctor who recently pled guilty to sexual assault and has been accused by over 140 women. The women’s stories reveal how enforced silence can be used to obscure the full extent of harmful, abusive, and criminal conduct, making it seem as if each account was an isolated incident instead of a pattern of behavior.

A recent report from the Financial Times also makes this point. An expose on a men-only charity event in London, the article revealed that the hostesses hired for the event were asked to sign NDAs (which they were not allowed to read or take with them). Afterwards, during the event, they were subjected to multiple instances of groping, including hands up skirts, and one report of having a penis exposed to her. But we only know about this treatment because the NDAs meant to protect this behavior were broken.

January 29, 2018 in Celebrity Contracts, Commentary, Current Affairs, In the News, Sports, True Contracts | Permalink | Comments (2)

Saturday, January 27, 2018

Grumpy Cat Lawsuit

Admittedly, this case does not present any difficult legal issues, but is worth the while anyway simply for the images involved. _99735192_gettyimages-459467912

A cat made famous online because of its sour-looking face caught the attention of the company Grenade Beverage, which, among other things, makes iced coffee drinks. the company obtained the rights to use the cat’s image (viewable here or on Twitter= on its packaging only, but also started using the image on t-shirts, coffee, etc.

The cat owners brought suit, claiming copyright and trademark infringement as well as beach of contract. A California federal jury agreed with the owners and awarded $710,000 in damages as well as $1 in nominal damages for breach of contract.

The cat reportedly earned millions of dollars in endorsement and advertising deals.

January 27, 2018 | Permalink

Friday, January 26, 2018

When a contract is unambiguous, then it gets enforced

A recent case out of Michigan, Dalton Township v. Charter Township of Muskegon, No. 335743 (behind paywall), involved a dispute over the payment of “hydrant fees.” The defendant ceased paying the fees, alleging that it was not required to pay them under the parties’ contract, and the plaintiffs sued. The defendant won summary judgment on the issue based on a plain language reading of the contract. Reiterating that “unambiguous contractual language must be enforced as written,” the court embarked on a close reading of the contract and determined that nowhere did it require the defendant to pay the disputed fees. There was no mention of any “hydrant fees” in the contract and the clauses that discussed revenue and expenses never mentioned any such fees. The court found that this was unambiguous and must be enforced as written and would not consider any extrinsic evidence on the issue.

(There was another issue in the case regarding whether disputes under the contract could be brought to court. The court concluded that it could resolve the dispute under the contract’s terms.)

January 26, 2018 in Recent Cases, True Contracts | Permalink | Comments (0)

Thursday, January 25, 2018

Adequate counsel and time to consider terms defeats claims of fraud and duress

A recent case out of the Northern District of Illinois, Washington v. Board of Education of the City of Chicago, No. 17 CV 2343 (behind paywall), tackles, among other things, fraud and duress in the context of enforcing a settlement agreement. Washington worked for the defendant. After a dispute arose between the parties, they entered into a settlement agreement. Washington now seeks to declare the settlement agreement unenforceable on a number of grounds. 

First, Washington alleged fraud on the part of the defendant, alleging a number of misrepresentations and intentional omissions in the agreement. But the defendant argued that Washington's reliance on the alleged statements and omissions wasn't reasonable and further that it had no duty to disclose any information to Washington, which the court agreed with. Washington had her own counsel; had three weeks to consider the agreement; and had seven days after signing within which she could revoke the agreement. Since she had adequate counsel and time to consider the terms, the court found that Washington could not allege that the settlement agreement was procured by fraud. 

Second, Washington alleged duress because she feared for the termination of her job and "a humiliating public hearing." The board argued that Washington had alternatives to signing the agreement, and in fact those alternatives would have entitled her to continue to receive her full salary while she pursued them, so there would have been no economic duress to those choices. Again, given her independent counsel and the amount of time she was given to consider her choices, the court found that Washington failed to allege duress. 

Washington made many other allegations, including illegality, mistake, and lack of consideration, all of which the court dismissed. 

 

January 25, 2018 in Labor Contracts, Recent Cases, True Contracts | Permalink | Comments (0)

Wednesday, January 24, 2018

The Jewish Family - Between Family Law and Contract Law

Our colleague Yehezkel Margalit of the Netanaya Academic College in Israle has written a new book on Contract Law.   About this:

Traditional Jewish family law has persevered for hundreds of years and rules covering marriage, the raising of children, and divorce are well established; yet pressures from modern society are causing long held views to be re-examined. The Jewish Family: Between Family Law and Contract Law examines the tenets of Jewish family law in the light of new attitudes concerning the role of women, assisted reproduction technologies, and prenuptial agreements. It explores, through interdisciplinary research combining the legal aspects of family law and contract law, how the Jewish family can cope with both old and modern obstacles and challenges. Focusing on the nexus of Jewish family law and contract law to propose how 'freedom of contract' can be part of how family law can be interpreted, The Jewish Family will appeal to practitioners, activists, academic researchers, and laymen readers who are interested in the fields of law, theology, and social science.

See Professor Margalit's book here.

January 24, 2018 in Books | Permalink

Tuesday, January 23, 2018

Noncompete in the online-auction industry found unenforceable

A recent case out of Minnesota, Oberfoell v. Kyte, A17-0575, reminds all of us that noncompete agreements need to have a justification. Kyte worked for Oberfoell's online-auction business and signed a contract that contained a noncompete clause. He later left to start his own online-auction business and Oberfoell sued.

The lower court found the noncompete agreement to be unenforceable and this appellate court agreed. Oberfoell simply couldn't justify its necessity because he failed to assert a legitimate business interest protected by the noncompete clause. Oberfoell made general allegations that Kyte had personal relationships with many of Oberfoell's customers and thus possessed goodwill belonging to Oberfoell. But Oberfoell never identified any customers who he was worried about, nor did he ever introduce any evidence that Kyte had used any of Oberfoell's customer lists improperly. The court concluded that Kyte did not seem to be the "face" of the business nor was he the exclusive contact the customers had with the business. There was no evidence that any of Oberfoell's customers were concerned about Kyte leaving and no evidence that any of them followed Kyte to his new business. Therefore, Oberfoell failed to prove that the noncompete was protecting a legitimate business interest. 

Oberfoell also tried to assert that his customer lists and other materials were taken by Kyte and qualified as a violation of the noncompete. The court pointed out that the customer lists weren't secret and weren't treated as secrets by Oberfoell, and so couldn't qualify as trade secrets. The other materials suffered from the same lack of confidential protection. 

Finally, the noncompete also failed on the basis of reasonableness. It prohibited Kyte from competing in a radius of 150 miles for five years. The court found the 150-mile restriction to be "arbitrary," and Oberfoell produced no evidence justifying his choice of such a large radius. The five-year restriction was also unreasonable because the evidence showed Oberfoell could have replaced Kyte easily and quickly, so there was no reason to keep Kyte from competing for so long (in fact, Oberfoell apparently never hired anyone to replace Kyte, delegating his responsibilities to already-existing employees). There was no evidence that Kyte had received any extensive training that gave him an advantage in establishing his business, which took him a few months to get started. 

January 23, 2018 in E-commerce, Labor Contracts, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Thursday, January 18, 2018

But what does the HQ stand for????

Everyone is talking about HQ Trivia right now, it seems. I'll be honest, though: Last week was the first time I've ever heard of the app. "It's a live trivia show," I was told. "You play twice a day with hundreds of thousands of your closest friends and try to win money." 

I downloaded the app because I was curious, and everything about it was an odd, surreal experience. I hadn't expected there to be a live host making uncomfortable one-sided banter to fill time while the start of the game was delayed. Then, when the questions started up, I...had no idea what to do, because nothing about my screen ever changed. I was just staring at the host the whole time. I couldn't figure out how to answer a question. 

I found out later that the question is supposed to pop up on your screen. It didn't on my screen, an issue that I saw other people online complaining about, so I know it at least wasn't my own incompetence. I didn't really stick around for more, though. I deleted the app, thinking it was just something that didn't seem to be my kind of thing. 

While I was Googling my app experience, though, I came across this pretty wild article from The Daily Beast and it made me think about a thought exercise I like to make my contracts students engage in at the very beginning of the semester: What does each party to a transaction want from the relationship they're about to enter into, and how will that translate into the contract? The article recounts an interview the Daily Beast conducted with the app's main host, and then their interactions with the app's CEO. At the end, it's revealed that the app is in a negotiation for a long-term contract with the main host. The rest of the article provides a lot of meat for speculation as to how those negotiations might go, based on the comments of both the main host and the CEO. The CEO appears to be very worried about the app's trade secrets being revealed, so one can assume that the contract would be very strict about the host's interactions with the media. Doubtless the parties will discuss a non-competition clause as well.  And how much will the negotiations be impacted by the newness of the HQ app phenomenon; the uniqueness of its setup; and the fuzziness of its future plans? All interesting things to consider. 

January 18, 2018 in Commentary, Current Affairs, E-commerce, Games, In the News, True Contracts, Web/Tech | Permalink | Comments (0)

Wednesday, January 17, 2018

A decision to make you think twice before tweeting your idea to a celebrity

Those posting ideas to the internet, in tweets or YouTube trailers or other websites: take note. This is an older decision, but one worth recounting on this blog I think. Out of the Central District of California, Alexander v. Metro-Goldwyn-Mayer Studios, Inc., CV 17-3123-RSWL-KSx, warns you that making your ideas available for free can mean that you forfeit the right to pursue compensation if someone else uses them. 

The case concerns the movie "Creed," which the plaintiff Alexander alleged he came up with. He sued the defendants for misappropriation of his idea, breach of implied contract, and unjust enrichment. The misappropriation of idea claim fails in California, so the court moves on to the breach of implied contract claim, where Alexander also faltered because he failed to allege that he ever offered the "Creed" idea for sale. In tweeting the idea at Sylvester Stallone, the court read the allegations as portraying a gratuitous offer of the idea to Stallone. 

Alexander argued that he thought he would be paid for the idea based on industry custom, and that the defendants understood that he tweeted the idea at them with the expectation of payment. But the court disagreed. All Alexander did was tweet the idea at Stallone and post it all over the internet; those actions were not compatible with expecting compensation, since the idea was widely available for free. There was never any communication between Alexander and the defendants, so the court found that it "strain[ed] reason" to imply an agreement for compensation from an unanswered tweet and the posting of the idea in other places on the internet.  

Finally, the unjust enrichment claim also failed. Alexander could not allege how the defendants benefitted from his idea, since he never alleged how the defendants accepted the idea. At any rate, since the idea was available for free all over the internet, the court stated that it was "unclear" why the defendants should be expected to compensate Alexander. 

January 17, 2018 in Celebrity Contracts, Commentary, Film, Recent Cases, True Contracts, Web/Tech | Permalink | Comments (0)

Tuesday, January 16, 2018

A dispute between a college and its resigned athletic director

The plaintiff Wilson resigned his position as the athletic director for the defendant Northland College after investigation for two sexual harassment complaints. Wilson and the college signed an agreement upon his resignation that restricted what the college could say about the situation to the media. The college radio station subsequently ran some stories reporting on Wilson's resignation. Wilson sued for, inter alia, breach of the separation agreement. The college moved to dismiss and the Western District of Wisconsin recently granted the motion in Wilson v. Northland College, 17-cv-337-slc (behind paywall).

The problem was Wilson couldn't identify any term of the contract that the college breached. The contract set forth a joint press release to be issued and stated that "[t]o the extent that either party is asked by a media source of any sort to provide an additional explanation, both parties will state that the mutually agreed upon statement speaks for itself." The college issued the require statement and the college radio host, beyond reporting that Wilson had resigned, did not provide any reasons for the resignation and referred to the press release, exactly as the contract required. 

Wilson's main arguments were that the press release was supposed to be the college's only statement and that no college employee (which the radio host was) could speak about Wilson's conduct, sexual harassment, or investigations in any way. But the court concluded that that was not what the contract called for and the radio host's statements that the college would not comment for the reasons behind the resignation beyond the press release complied with the college's contractual obligations. 

January 16, 2018 in Recent Cases, True Contracts | Permalink | Comments (0)

Monday, January 15, 2018

In which I arrive at a comic strip idea Marvel wouldn't approve of

I would say this is the time of year when I am perpetually behind, except that that is every time of year, so it's not surprising that it's taken me a bit to blog about Marvel's Create Your Own platform. As the article here makes clear, the terms and conditions require those uploading to the site to provide to Marvel the right to do almost anything it wishes with the material, without limit, notice, attribution, or payment. You can read all of the terms and conditions here.

In addition, the terms and conditions contain a long list of prohibited content, including such vague terms as "sensationalism" (defined as "killer bees, gossip, aliens, scandal, etc." which is one of my favorite collections of nouns ever) and "alternative lifestyle advocacies" (who is deciding what an alternative lifestyle is?), "misleading language" (misleading as to what?), and a catch-all "other controversial topics." (Incidentally, it also includes what I assume is a typo, as it prohibits "suggestive or revealing images" which it defines as "bare midriffs, lets, etc." I assume that's meant to be "legs.")

...Am I the only one who now wants to read a comic strip about aliens who advocate alternative lifestyles and raise killer bees, sharing scandalous gossip and double entendres (also prohibited) with their other alien alternative-lifestyle friends over a couple of glasses of wine (ditto) during their weekly high-stakes poker game (yup), all while baring their midriffs? 

(All of the prohibitions are blanket prohibitions except for graphic violence, which might be approved on a case-by-case basis.)

January 15, 2018 in Commentary, Current Affairs, In the News, True Contracts, Web/Tech | Permalink | Comments (0)

Thursday, January 11, 2018

Starbucks Wins: Enough Coffee in Cup

As we all know, there is a lawsuit for everything, including whether Starbucks deliberately underfills its lattes to save on the cost of milk. This could constitute a breach of express warranty. So argued a group of plaintiffs in the United States District Court for the Northern District of California recently. The court dismissed the argument on a motion for summary judgment. Unknown

Plaintiffs’ arguments were threefold: First, that “when filled to the brink,” Starbucks’ cups hold only exactly the beverage volumes listed on the menus. The court dismissed that argument because Starbucks requires its cup manufacturers to make the cups 8-12% larger than the promised beverage volume. Second, that the milk foam added to lattes should not count towards the beverage volume. However, as plaintiffs themselves had argued that milk foam is a component of a latte, the court quickly dismissed that argument as well. Third, plaintiffs argued that the “fill-to” lines in steaming pitchers used by baristas to make the lattes are too low for the finished product to contain the expressly promised volume. The court also dismissed that as the steam is an essential part of a latte.

In short, the court agreed with Starbucks that plaintiffs could not prove that any false statements had been made at all. What was warranted was also what was sold.

Incidentally, Starbucks is – as many other previously very popular brands – increasingly suffering from an image problem: they have apparently become too boring and basic. Once seen as cool and edgy, they are now seen as too ubiquitous, in large part because they simply have too many stores. Their solution is to open upscale Roasteries and Reserve stores.

Images
Meanwhile, the competition – Dunkin’ Donuts and McDonald’s for example – charge $3 less for coffee than Starbucks. The same fate might be countered by Subway Sandwiches, previously the nation’s second-largest fast-food chain.  They too might have grown too much and too fast. Additionally, Subway’s menus are seen as too boring, especially by younger millennials who prefer a more diverse range of options, including salads and healthier choices."

The Starbucks case is Strumlauf et. al. v. Starbucks Corporation, Case No. 16-cv-01306-YGR.

January 11, 2018 in Commentary, Current Affairs, Famous Cases, Food and Drink | Permalink